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The policy itself sounds simple: Slap a tax on all US oil, coal, and natural gas use, starting at per ton of CO2 emitted and rising over time.
All revenue from the tax would be completely refunded to Americans in the form of quarterly dividend checks.
Under the circumstances, it’s hard to see why they’d sign up for a big carbon tax, no matter how many times you write “conservative” on the packaging.
Instead, companies and consumers would be given clear market signals in the form of higher fossil fuel prices — to compensate for the damage caused by emissions — and can then figure out on their own how best to respond. This issue brief, from Noah Kaufman, Michael Obeiter, and Eleanor Krause of the World Resources Institute (WRI), lays out a few recent estimates: So a per ton carbon tax that rose over time might cut emissions 20 to 30 percent below 2005 levels by 2030 (which is close to the US pledge under the Paris agreement).The carbon tax wouldn’t affect methane leaks from landfills, or forestry, or agriculture, or hydrofluorocarbons from air conditioners.You’d need to deal with those separately, either through pricing or regulation.Most carbon tax models project huge CO2 reductions in the electricity sector (where, from past experience, we can see that utilities are very sensitive to price) but scant reductions from transportation and industry. The authors amass some suggestive historical evidence that drivers and automakers and refineries and a bunch of other businesses would react to a carbon tax in all sorts of hard-to-predict ways that would lead to even bigger cuts: policy to address climate change.For one, it only applies to CO2 from oil, gas, and coal use, which accounts for just four-fifths of total US greenhouse gas emissions.